Wharf Real Estate Investment Company Limited · HKEX:1997
Wharf Real Estate Investment — Wharf Real Estate Inv — H1 2023 Earnings Presentation
32 slides from Wharf Real Estate Investment's earnings presentation, Aug 7, 2023
Slide 1: Hong Kong Recovery Well Below Pre-COVID
Hong Kong Recovery Well Below Pre-COVID Wharf Real Estate Investment Company Limited 2023 Interim Results 7 Aug 2023
Slide 2: Results Highlights
Results Highlights Hong Kong Visitor Arrivals & Retail Sales Still Well Below Pre-pandemic Levels Rental Billings Improved But Obscured by Amortisation Accounting Hotels Turnaround is More Visible But Has Lost Momentum Borrowing Cost Tripling will be Mitigated by the Lowest Net Debt in 4 Years Valua
Slide 3: Challenging Market Persists
Challenging Market Persists HK Retail Sales & Visitor Arrivals HK$ Billion Visitor Arrivals (RHS) HK Retail Sales (LHS) Million • HK Retail Sales & Visitor Arrivals Stagnated in 2Q 300 248 237 241 60 205 50 190 174 179 180 200 34.5 34.9 170 40 − HK Retail Sales (1Q: +24%, 2Q: +18%) 30.6 161 166 30 2
Slide 4: HKIP Well Below Pre-COVID
HKIP Well Below Pre-COVID HKIP Revenue Breakdown 1H23: $5.3B (+2%) • HKIP Pre-COVID Track Record Set a High Benchmark HK$ Billion S.A. 8 0.1 Office 0.1 • Retail Revenue +8%; 70%/67% of Pre-COVID Level in 2018/19 7 0.1 0.1 Retail 1.8 1.9 1.9 0.1 6 1.9 0.1 0.1 0.1 0.1 0.1 (-1%) − Spot Rent Stabilised;
Slide 5: Financial Highlights
Financial Highlights HK$M 1H23 1H22 % Chg. • HKIP OPM +3 ppt, Group UNP -9% Group Revenue 6,473 6,210 +4% - HKIP 5,292 5,205 +2% − UNP Growth Offset by Higher Borrowing Costs (↑$0.7B YoY) Operating Profit 4,940 4,446 +11% - HKIP 4,559 4,316 +6% Underlying Net Profit (UNP)* 3,059 3,373 -9% − 1-month
Slide 6: Strong Financial Position
Strong Financial Position Net Debt (HK$ Billion) 52.6 52.0 50.4 • Net Debt ↓$6.0B to $39.1B; Lowest in 4 Years 47.5 46.8 45.2 42.6 39.1 • Gearing -3.1ppts to 20.1%; Total Equity $194.9B • Interest Cost: 4.7% (Floating Rates) Dec Jun Dec Jun Dec Jun Dec Jun 2019 2020 2021 2022 2023 Debt Maturity (HK$
Slide 7: Harbour City
Harbour City Wharf Real Estate Investment Company Limited – 2023 Interim Results Harbour City 7
Slide 8: Regaining Strength
Regaining Strength HC Revenue Breakdown 1H23: $4.4B (+8%) HK$ Billion 7 S.A. 0.1 Hotels & Club 6 0.1 0.1 Office • Partial Recovery in Retail & Hotel Revenue 0.7 0.8 0.7 0.1 Retail 5 0.5 1.4 0.1 0.1 (-1%) 1.3 1.4 0.2 0.1 0.1 0.1 0.1 0.1 • Retail Rent Improving under Rising Tenant Demand 4 1.4 0.2 0.2
Slide 9: Must-visit All-in-one Destination
Must-visit All-in-one Destination • 500+ Diverse Shopping & Dining Options in One-stop HC Retail Rental Category Breakdown 1H23: $2.4B • Constant Tenant Mix Refinement; Exclusive Concepts & Pop-ups F&B & Ent. • Breathtaking Views of HK from 270° Panoramic Observatory Deck 6% • Proximity to High-Spee
Slide 10: Engaging Tourists & Locals
Engaging Tourists & Locals • Tourist-centric Shopping Privileges & Dining Offers • Buzzworthy World-class Events for Families & Millennials − “Disney 100: Travel Together with Wharf Malls” − “GIANTS: Rising Up” Art Installation, & etc. • Rechannelled Marketing Spend to Capture Locals & Visitors • In
Slide 11: Contiguous 530-metre High Fashion Frontage
Contiguous 530-metre High Fashion Frontage Miu Van Cleef Dolce & Dior Chanel LV Gucci De Beers PRADA FERRAGAMO Piaget MONCLER Hermès Emporio Armani Giorgio Armani Miu & Arpels Gabbana • Proprietary Tenant Selection Strategy to Optimise Synergies • Enhanced Lux Brand Mix amid Consolidation & COVID ye
Slide 12: Tenant Demand on the Rise
Tenant Demand on the Rise Selected Brands & Restaurants Openings Expansions by World Renowned Brands Debut Brands Van Cleef & Arpels De Beers EP YAYING (3-storey flagship) (2-storey flagship) Jewellery & Accs. Fashion / Leather Goods Beauty Beauty / Lifestyle F&B Wharf Real Estate Investment Company
Slide 13: Times Square
Times Square Wharf Real Estate Investment Company Limited – 2023 Interim Results Times Square 13
Slide 14: Competitive Landscape
Competitive Landscape TS Revenue Breakdown • Refining Luxury & Aspirational Brand Mix 1H23: $0.9B (-2%) HK$ Billion • Buzz-generating Marketing Promotions & Experiential 1.6 Office Spaces to Attract Shoppers 1.4 Retail 1.2 0.4 0.4 0.4 • Office: Weak Demand Under Volatile Business Outlook 0.4 1.0 0.3
Slide 15: Plaza Hollywood
Plaza Hollywood Wharf Real Estate Investment Company Limited – 2023 Interim Results Plaza Hollywood 15
Slide 16: Local-oriented Mall in Kowloon East
Local-oriented Mall in Kowloon East • Interchange with “Tuen Ma” MTR Line Added Ma On Shan Yuen Long − Kai Tak & Tai Wai within 2 Stops Tsuen Wan West Tai Wai Tuen Mun Diamond Hill − TST, Hunghom, Ho Man Tin & To Kwa Wan within 6 Stops Kai Tak Ho Man Tin − Direct to Tsuen Wan, Yuen Long, Tuen Mun &
Slide 17: Hotels
Hotels Wharf Real Estate Investment Company Limited – 2023 Interim Results Hotels 17
Slide 18: The Murray & Marco Polo Hotels
The Murray & Marco Polo Hotels The Murray, Hong Kong • Visible Growth in GOP But Lost Momentum in 2Q23 Forbes Travel Guide − Partial Recovery in Occupancy; Room Rate Back to Pre-COVID Level Five-Star Award For the Second Year − Mounting Cost Pressure • The Murray: More Corporate Demand & Events Prin
Slide 19: Outlook
Outlook Wharf Real Estate Investment Company Limited – 2023 Interim Results Outlook 19
Slide 20: Post-pandemic Readjustment
Post-pandemic Readjustment • Retail & Hotel: Challenged by Pace of Recovery • Office: Market Oversupply to Persist Until a Significant Shift in Business Climate • Mounting Pressure on Cost Inflation; Interest Rates Peaking out in 2023? • Prudent to Stay Alert to Global Economic Uncertainties & Other
Slide 21: Sustainability
Sustainability Wharf Real Estate Investment Company Limited – 2023 Interim Results Sustainability 21
Slide 22: 2030 Long-term Targets
2030 Long-term Targets Overall GHG Emissions Electricity Intensity To Reduce 30% by 2030 To Reduce 27% at HKIP by 2030 Using 2014 as Baseline Using 2014 as Baseline 2030 Targets Water Consumption Waste Diversion To Reduce 18% at HK operations by 2030 To Divert Waste Away from Landfills Using 2014 as
Slide 23: ESG Performances & Recognitions
ESG Performances & Recognitions Hang Seng Corporate Sustainability Index (AA+ Rating) Social Capital & Sustainability Hang Seng ESG 50 Index Grand Awards Ratings & Awards ESG Certifications Gold Certification Silver Certification Bronze Certification MSCI ESG Rating (A Rating) CSR Index Plus Mark Ca
Slide 24: Environmental: Asset Enhancements & Renewable Energy
Environmental: Asset Enhancements & Renewable Energy • 320 Solar Photovoltaic Panels Installed at HC, 18 at PH & >100 will be Installed in TS • 100 Sets Installed at to support RE development & FiT* Scheme Gateway Apt. since 2009 Solar • Offset 27+ Tonnes of CO2 Solar Thermal Photovoltaic Emissions
Slide 25: Social: Community Contributions
Social: Community Contributions 2nd Top Donor Wharf Emergency Relief Fund – 2022 Donation: by The Community Chest • $7.5M Donations to The Community Chest Rainbow Fund Donations for Two Consecutive Years during 5th Wave (2020/2021 & 2021/2022) • Additional $5M to Students in 82 Project WeCan Schools
Slide 26: People: Governance, Talent Development & Workplace Safety
People: Governance, Talent Development & Workplace Safety Composition of Board of Directors (12 Board Members as of 30 Jun 23) 2022 Meeting Attendance* Designation Directors with Executive Functions (33%) Independent Non-executive Directors (67%) Age 50-60 (17%) 61-70 (25%) 71-80 (58%) 95% Gender Ma
Slide 27: Appendix
Appendix Wharf Real Estate Investment Company Limited – 2023 Interim Results Appendix 27
Slide 28: HC/TS/PH Performance
HC/TS/PH Performance Harbour City Times Square Plaza Hollywood 1H23 (HK$M) Revenue YoY Chg Revenue YoY Chg Revenue YoY Chg Retail 2,704 +9% 603 +6% 233 +5% Office 1,158 -8% 298 -14% - - Hotels & Club 432 +90% - - - - Serviced Apt. 73 -1% - - - - Total 4,367 +8% 901 -2% 233 +5% Valuation* as of 30 Ju
Slide 29: Premium Quality Portfolio
Premium Quality Portfolio Revenue Valuation* GFA Harbour City Harbour City Harbour City 68.5% 72.0% 67.4% 1H23 Revenue Valuation GFA $6.1B $240.7B 12.3M s.f Singapore Singapore Assets Assets Times Square Singapore Times Square 2.7% 2.6% 19.7% Assets Plaza Plaza Plaza 16.1% Times Square 4.8% Central
Slide 30: Overview of Application of Funds
Overview of Application of Funds Major Capital & Development Expenditure To be Incurred in Coming Years HK$ Incurred in 1H23 Committed Uncommitted Total HKIP 16M 57M 337M 394M Singapore IP 4M - - - Mainland Properties 59M 351M 368M 719M Hotels & Others 17M 18M 1M 19M Total 96M 426M 706M 1,132M Wharf
Slide 31: Thank You
Thank You Hong Kong Recovery Well Below Pre-COVID Wharf Real Estate Investment Company Limited – 2023 Interim Results Thank You 31
Slide 32: End of Presentation
End of Presentation Wharf Real Estate Investment Company Limited [HKEx Stock Code: 1997.HK] Disclaimer All information and data are provided for information purposes only. All opinions included herein constitute our judgment as of the date hereof and are subject to change without notice. The Group,
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